First Milk Results

First Milk’s financial results will make unpleasant reading for its farmer suppliers.  In the year to 31^st March 2015 the co-op made a pre-tax loss of £24.9m – this compares to a loss of £4.3m the year previously.  Turnover dropped 28% from £611m to £442m.  Bank debt at the end of the year stood at just over £60m.

With a new management team in place, there was an element of getting all the bad financial news out at once.  Even so, the loss before one-off items was still £23.5m (compared to a profit of £3.5m last year).

Just as worrying, the report of the independent Auditors report on the accounts indicates that First Milk ‘continued to be loss making for the 6 month period to 30^th September 2015‘.  This is despite the milk price cuts and other reorganisations undertaken by the business.  The Auditors go on to state that ‘there are material uncertainties which may cast significant doubt upon the Group’s … ability to continue as a going concern’.  One of these uncertainties is the fact that finance facilities are only in place until 1^st February 2016.  First Milk’s bankers, Barclays, Lloyds and Bank of Scotland, will need to provide substantial funding beyond that date if the business is to survive.